Hotel Sales And Marketing: Key Trends And Issues
Hotel salesand marketing:key trendsand issueswww.hotelanalyst.co.uk
Contents1. Introduction12. Sales and marketing: the basics2.1 Marketing2.2 Sales2.3 Sales and marketing structures and strategies22563. Distribution channels3.1 Use of distribution channels3.2 Direct channels3.3 Indirect channels3.4 Distribution systems and strategies11111223324. Social media marketing4.1 Introduction4.2 Main social media channels4.3 Industry thinking on social media4.4 Social media and marketing4.5 Trends and issues in social media3838404445465. Guest review sites5.1 Introduction5.2 TripAdvisor5.3 Trends and issues5.4 Links to marketing48484949506. Revenue management517. Brand management538. Loyalty programmes559. Trends and issues59
1. IntroductionThis reports aims to discuss the key trends and issues that are currently impacting sales andmarketing within the hotel industry. This particular sector has been transformed over recentyears, by advances in technology which in turn have changed consumer’s buying habits.The report begins by discussing the main processes in sales and marketing, and providingup-to-date examples of sales and marketing programmes within the industry. The reportalso gives examples of the sales and marketing structures and strategies of the leadingglobal hotel chains.Distribution channels that are used by hotels are discussed, with particular reference to theonline channels that are becoming increasingly important. The web and mobile technologyare reviewed in depth with industry examples helping to highlight the main issues.Social media, one of the key issues affecting the industry at current is examined in detail,considering key media and their impact upon the marketing of hotels. Another increasinglyimportant aspect of marketing is evaluated, that of hotel review sites.Both revenue management and brand management are explained, before the report movesto discuss loyalty programmes.The final section of the report presents the key trends and issues that impact on themarketing function, and will look at multi-channel management, marketing in a social,local and mobile (SoLoMo) world, the advent of Google into the travel market place andwhat Big Data will mean to the hotel industry.Hotel sales and marketing: key trends and issues1
2. Sales and marketing: the basics2.1 MarketingKotler, Bowen and Makens define marketing as “the processby which companies create value for customers and society,resulting in strong customer relationships that capture valuefrom the customers in return1.”An important aspect of marketing is the marketing mixwhich includes product, price, distribution and advertisingand sales. Marketing also includes research, informationsystems and planning.The four-P framework calls on marketing professionals to decideon the product and its characteristics, set the price, decide howto distribute their product and choose methods for promotingtheir product.If marketers do a good job of identifying customer needs,developing a good product, and pricing and distributing andpromoting it effectively, the result will be attractive productsand satisfied customers. Marketing means “hitting the mark”.Peter Drucker, a leading management thinker, put it this way“The aim of marketing is to make selling superfluous. The aimis to know and understand customers so well that the productor service fits them and sells itself”This does not mean that selling and promotion are unimportant,but rather that they are part of the larger marketing mix,a set of marketing tools that work together to producesatisfied customers.“Marketing is so basic that it cannot be considered a separatefunction. It is the whole business seen from the point of viewof its final result, that is, the customer’s point of view Business success is not determined by the producer but by thecustomer”. (Peter Drucker)The marketing processChart 1 shows a simple five step model of the marketingprocess. In the first four steps companies work to understandconsumers, create customer value and build strong customerrelationships. In the final step, companies reap the rewardsof creating superior customer value. By creating value forcustomers, they are in turn capturing value from customersin the form of sales, profits and long-term customer equity.The first three steps in the marketing process – understandingthe marketplace and customer needs, designing a customerdriven marketing strategy, and preparing an integratedmarketing plan – all lead up to the fourth and most importantstep: building profitable customer relationships.Chart 1: The marketing processCreate value for customers and buildcustomer relationshipsUnderstand the marketplaceand customer wants andneedsDesign a customer-drivenmarketing strategyCapture value from customersto create profits and customerequityBuild profitable relationshipsand create customer delightCapture value from customers in returnSource: Marketing for Hospitality and Tourism1 Kotler P, Bowen JT & Makens JC, Marketing for Hospitality and Tourism,Sixth Edition, Pearson2Hotel sales and marketing: key trends and issuesConstruct an integratedmarketing programme thatdelivers superior value
Sales and marketing: the basics continuedMeliá Hotels International11Sales Bases its sales team on a regional structure with strategyfor each segment, co-ordinated as a whole. The team is present in the main markets of origin, with eachregion having sales targets not only for their own market butalso for abroad. The main regions covered are:––Spain with 100 employees in six Spanish cities, where salesare centralised and managed in all segments––EMEA – has offices in the UK, France, Italy and Germany.Has 40 employees.––America – corporate office in Miami. Mexico City and Cancunhave sales offices as well as a Group Reservations Desk.––Brazil – regional management are based in São Paulo, as wellas marketing, administration and sales. Has 20 employees.––Asia – has team of four in Shanghai who are in chargeof Groups, Business and Resorts. Segments covered include Meetings & Events, Business Travel,Leisure and OTAs.RezidorRezidor’s strategy based on the five pillars of Loyalty, Sales &Marketing, Revenue Optimisation, Travel Intermediaries andBrand Web. In 2012, material progress had been made towardsits key deliverables – especially with a strong performance ofits loyalty programme Club Carlson and Sales. The Global SalesTeams were enhanced to develop and foster increased salesbetween the Americas, Asia-Pacific and EMEA. In order tofully support the drive towards decentralisation in EMEA, thecommercial organisation has also been aligned and fortified tooptimise Revenue Generation to the areas of operations. SNAP,its price optimisation tool, is now used at 180 Rezidor hotelsacross EMEA, and further maximises the properties’ RevPARperformanceSalesIn Europe, Middle East and Africa (EMEA), Rezidor has over100 sales specialists in its global and national/regional salesorganisations. It has expanded through Carlson its salesorganisation to cover the Americas and Asia Pacific. Globally,it has 200 people to serve the client and drive revenue.Its worldwide distribution system includes a strong sales forces,with more than 250 sales representatives and 200 reservationagents in 15 Global Sales Offices, along with four ReservationCentres – in Omaha, Dublin, Delhi and Meishan12.11 www.melia.com12 www.rezidor.com7 DaysThe company focuses its efforts on its core targeted guestswhich consist of the growing Chinese population of valueconscious business and leisure travellers, as well as techsavvy guests.7 Days has sales and marketing personnel at its headquartersand at a local level. Sales and marketing efforts focus primarilyon its 7 Days Club membership programme, as opposed tosimply selling rooms. This membership programme provides thecompany with a proprietary database to conduct lower-cost,more targeted sales and marketing activities to its membersthrough its brand.com website and by email, WAP and SMS.Each hotels local sales efforts are supported by corporate officesales executives who develop and implement new marketingprogrammes, and respond to specific market needs andpreferences corporate marketing and advertising programmesare designed to enhance customer awareness and preferencefor 7 Days Inn brand and the 7 Days Club. In its marketingefforts, 7 Days encourages guest’s use of its e-commerceplatform, and the company has been successful in migratingits guests to these platforms and away from its call centre andmore – costly third party agents13.Starwood Hotels & ResortsStrategyAt one of the hotel group’s investor days in 2013, Starwoodforecast that mobile bookings will overtake computer-basedbookings in the near future. Executives also discussed itsstrategic shift to digital marketing, company president and CEOFrits van Paasschen commented “Marketing for us has gonealmost entirely digital from a central perspective, for all thereasons you would imagine: better information about peoplethat we’re engaging with, more accessibility, a better abilityto tell our brand stories, and, in a way, to start to increase thedialogue and direct interaction that we have with our guests.We have that through our websites, but increasingly also usingsocial media as part of that digital marketing function. In manyrespects, we lead in terms of our penetration through variousforms of social media.”14The Starwood sales and marketing efforts feature both a topdown (global) and bottom up (local) approach to ensure thatnew demand opportunities are generated from the greatestnumber of sources possible. This includes the StarwoodPreferred Guest (SPG) loyalty programme, Global and Field Salesteams and its Central Marketing Channels, helping to ensureevery opportunity is realized.13 7 Days Group Holdings, 20-F, April 201314 Hotel Analyst Distribution & Technology, Issue 14, April 2013Hotel sales and marketing: key trends and issues9
Sales and marketing: the basics continuedSales It has 33 international offices, with nearly 450 Global/Divisional sellers. In 2012, USD5.9 bn in revenue was drivento Starwood hotels globally. On-Property Sellers: a network of 4,600 property-level sellerswork with local and regional customers to drive bookings andincrease loyalty, complementing its global sales executives whofocus on major accounts of Starwood’s largest corporate andleisure clients. TeamHOT: the hotel-to-hotel group referral programmeis designed to drive incremental business to all Starwoodhotels by rewarding property sales professionals with cashincentives when their leads result in definite bookings at otherStarwood hotels. In 2012, TeamHOT generated USD200mfrom property to property referrals. Having this programmein place motivates each property sales professional within theorganization to become a seller not only for their property,but also for every hotel in the Starwood portfolio.MarketingStarwood propels business 24/7 through a synergy of stateof-the-art booking technology, customer contact centres andonline vehicles. Starwood Centralized Marketing Channelspropel 50% of total room revenue globally and provideunrivalled cross-sell and up-sell opportunities. Branded Web Channels: Representing every Starwoodbrand with imagery, online support and available in ninelanguages. In 2012, Starwood Web channels handled morethan 334 million visits. Customer Contact Centres: Starwood is the only major hotelcompany to offer brand-dedicated support at its CustomerContact Centres, which handled nearly 20million telephonecalls and guest interactions in 2012, provided 24/7 in25 languages. MARS: Minimized Abandoned Reservation Calls (MARS)works around the clock and allows hotels to seamlesslytransfer their property reservation calls to a CustomerContact Centre associate to ensure that every possiblebooking is realized. Field Marketing: Starwood Field Marketing teams serveas a local marketing agency that creates and executes specificonline and offline marketing plans.Wyndham Hotel Group (WHG)Wyndham Worldwide gave two of its strategic priorities as15: To strengthen the value proposition by upgradingand improving all of its brand websites and buildingan international platform. It aims to drive direct bookingsand improve conversion rates. It wants to enhance contentby overhauling information and images of 7,000 propertiesand improve search engine results. To drive organisational excellence through consolidatingCRS, optimising the IT infrastructure and improving callcentre efficiencyThe aim of Wyndham’s Apollo Strategic Initiatives was to driveincremental revenue to franchised and managed hotels andstrengthening the value of the brand. These initiatives and otherstrategies to strengthen the customer value proposition are: Improving consumer conversion on brand websitesby enhancing navigation, content, rate availabilityand technology. Improving the overall content of its hotel brands acrossall web channels. Optimising rate information for hotel owners throughall distribution channels Growing and strengthening the Wyndham Rewards loyaltyprogramme Continuing the deployment of the service culture tool,‘Count on Me’.SalesWHG has three call centres in Canada, the US and thePhilippines.MarketingThe international marketing team is dedicated to supplyingstrategies and campaigns aimed at raising brand awarenessand generating bookings. Some of the key initiatives include: Advertising campaigns tailored to various regions and keyfeeder markets Websites Wyndham Rewards loyalty programme Regional marketing co-op programmes that supplementindividual hotel’s marketing investment Brand identity tools and consultancy Monthly e-mail property newsletter with updateson campaigns and promotions Business-to-business marketing campaigns.15 www.wyndham.com10Hotel sales and marketing: key trends and issues
3. Distribution channelsA distribution channel is “a set of independent organisationsinvolved in the process of making a product or service availableto the consumer or business user16”Distribution networks in the hospitality industry consist ofcontractual agreements and loosely organised alliances betweenindependent organisations. In the hospitality and travel industry,distribution systems are used to move the customer to theproduct: the hotel, restaurant, airplanes.Most reservations are booked with the hotel directly. Thisincludes rooms booked by the sales department, those takenat the front desk and phone calls directly to the hotel. This isfollowed by brand.com which is reservations booked throughthe brand’s website site, e.g. Hilton.com, Marriott.com etc.other sources are voice calls to a central reservation office(CRO), GDS and online travel agents (OTAs). The marginalcost of these different channels varies greatly. Obviouslya reservation via the brand.com website is the cheapest.However, when a hotel has rooms to fill, OTAs can help sellthe rooms. A revenue manager has to manage the channels17.There is no doubt that hotel distribution has changeddramatically since the advent of the internet. Onlinedistribution, social media and the mobile web have all changedhow hoteliers connect with, engage and ultimately convertcustomers. But the fundamental principles of hotel distributionhave not changed that much. Hoteliers need to focus ondistribution channels that pass the litmus test; in other words,those that are cost-effective, generate the most bookings,protect rate parity and price integrity and reach the targetedcustomer segments.Not all bookings are created equal, and hoteliers usuallyconsider that any booking via a more discounted channel(such as flash sale sites like GroupOn, LivingLocal.com andSniqueAway.com) is one less booking for the same hotel viathe hotel website, call centre, GDS or OTA in that order.3.1 Use of distribution channelsRecent data from TravelClick’s North American DistributionReview, Q2 2013 showed that of bookings during Q1 2013,a quarter went through brand.com website and anotherquarter direct to the hotel, some 21% were made using GDS,15% through a CRS and some 12% used OTAs. However,with regards to growth, online channels that included OTAsand hotel websites (brand.com) continued to experience themost growth. OTA channel saw 14% increase in demand inQ1 while bookings through the Brand.com channel increasedby 5%. The hotel direct channel, consisting of phone callsdirect to the property and walk ins increased by 4%. The GDS(used by travel agents) and CRS (calls to a hotels 800-number)channels, however, showed decreases of -0.3% and -4%,respectively, from a year ago19.With regards to Europe, a study by Susquehanna FinancialGroup found that OTA Booking.com has emergedoverwhelmingly as the dominant distribution channelfor European hotels according to a survey of more than200 properties.While hotels use an average of 3.5 online travel agencies fordistribution, on average 50% of online reservations, are comingfrom Priceline-owned booking.com.A further 30% of reservations are from a combination ofother OTAs, with Expedia and its sister brands featuring quitestrongly, while the remaining 20% come from the hotels’own websites20.As far as individual hotel company’s bookings are conducted,for Home Inns, for example the member from their loyaltyprogramme are important to the company, accounting forover half of all bookings in 2012.The main focus and priority for any hotelier should be (or hashistorically been) to sell as much inventory via the most costeffective distribution channels that can potentially generate themost bookings, while preserving rate parity and price erosion18.16 Stern LW & El-Ansary A, Marketing Channels, Third edition, Prentice Hall17 Kotler P, Bowen JT & Makens JC, Marketing for Hospitality and Tourism, SixthEdition, Pearson18 HotelsNewsResource.com; Online distribution channels experience healthygrowth in the first quarter 2013, May 201320 0-of-european-onlinehotel-reservations/Hotel sales and marketing: key trends and issues11
3. Distribution channels continuedTable 2: Examples of leading hotel company’s mobile technologyCompanyMobile websiteAppsAccorNew mobile apps on Android, iOS and Blackberryfor Ibis megabrand and umbrella Accorhotels.comBestWesternToGo apps for iPhone and AndroidChoiceMobile website & apps– 10million unique visitorsBestWesternToGo – introducedin 2009 and refreshed in 2013Has mobile websiteHiltonHyattIHGHas mobile websiteHas mobile websiteLaunched In 2009Best WesternSingle app for all brands- RapidBook app for mobiledevicesiPhone and Android apps for each brandSingle app for all brandsiPhone apps for all 7 brandsiPad app for Priority RewardsJin JiangLouvre Hotels GroupMarriottMeliá Hotels InternationalJJHotelsLite booking app launched“HotelforYou” app launched 2009 for iPhone andBlackberry and in 2012 for AndroidSingle app for Marriott – downloaded 2.3million timesMeliáRewardsLaunched mobile websitesfor budget brands – July 201310million visits/monthLaunched in July 2013App – 2013Starwood H&R2013 – launched enhanced mobilewebsite across all 9 brandsWyndhamHas mobile websiteFor iPhone and AndroidSingle app for Starwood brands through itsSPG app for iPad, iPhone and Chinese app for AndroidSingle app for all brandsSource: Company press releases‘App’tivity among the major hotel chainsAccor said that it had seen mobile bookings “booming” withsales through the channels up 20-fold in four years. Last yearthe group’s apps and mobile websites recorded over 10 millionunique visitors.With mobile on the rise, all operators must now considerhaving an app alongside their website, whether their websiteit available on mobile devices or not. In the competitive worldof economy hotels, being seen to be driving innovation isparticularly important.Accor said that the new accorhotels.com app wou
TeamHOT: the hotel-to-hotel group referral programme is designed to drive incremental business to all Starwood hotels by rewarding property sales professionals with cash incentives when their leads result in definite bookings at other Starwood hotels. In 2012, TeamHOT generated USD200m from property to property referrals. Having this programme
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